Third Circuit Deals Blow to Labor Judges in Farmworker Case (1)

A New Jersey farm’s challenge to the Labor Department’s administrative law judge system found success at a federal appeals court in Philadelphia.

Internal agency judges lack the power under new US Supreme Court precedent to hear enforcement disputes over the H-2A visa program for seasonal farm workers, a US Court of Appeals for the Third Circuit panel found Tuesday.

It ruled in favor of Sun Valley Orchards LLC, which sought to overturn more than half a million dollars in penalties related to the seasonal work visa program by arguing that the DOL’s judicial system was unconstitutional under SEC v. Jarkesy.

Businesses have made numerous attacks on administrative law judges at regulatory agencies following that 2024 ruling, in which the justices held that defendants facing civil penalties have a Seventh Amendment right to a trial in an Article III federal court.

The panel’s decision means “the days of the Department of Labor imposing fines and back wages through its own in-house courts are over,” said Rob Johnson, a senior attorney at the Institute for Justice and counsel for Sun Valley.

“Employers will have the right to defend themselves before a real judge, not an agency employee,” Johnson said. “That’s a win for basic fairness and for small businesses across the country.”

Oral arguments in the case hinged on whether enforcement of H-2A violations fell within a public rights exception in Jarkesy that would allow certain matters like tariffs and immigration to be adjudicated outside of Article III courts. Although the DOL argued that the case was about immigration, the Third Circuit wasn’t convinced.

Some portions of the H-2A program may implicate the president’s power over foreign affairs, but “the fact that DOL has some authority to proceed in a non-Article III tribunal does not give it carte blanche to do so for all violations,” Judge Thomas Hardiman, a George W. Bush appointee, wrote in the opinion.

The case was also heard by Circuit Judges D. Brooks Smith, also a George H.W. Bush appointee, and David J. Porter, a Trump appointee.

Public Rights Exception

The constitutionality of removal protections for in-house judge systems at federal agencies has been the focus of multiple lawsuits by employers like SpaceX and Walmart Inc. with varying success. Although SpaceX convinced a district court to block Justice Department proceedings on those grounds, the Eleventh Circuit this month held that removal protections were constitutional in a case involving judges based in the agency’s Executive Office for Immigration Review.

The Third Circuit hearing over the Sun Valley case didn’t address removal restrictions for agency law judges. The farm included that argument in its appeal, but the DOL responded that it failed to raise the issue in enforcement proceedings.

Agency investigators found violations of H-2A regulations by the New Jersey farm involving housing, meal plans, and transportation, leading it to assess fines for civil penalties and back wages. Tuesday’s ruling outlined the limits of Jarkey’s public rights exception even when an agency enforces regulations governing employment of temporary foreign workers.

Labor certification regulations don’t “directly address the admission and exclusion of aliens,” Hardiman wrote. Instead, they promote the domestic policy goal of protecting wages and working conditions of US workers, he found.

The DOL didn’t immediately respond to a request for comment.

Sun Valley was also represented by Wilhelm & Roemersma P.C. The Labor Department was represented by the Department of Justice.

The case is Sun Valley Orchards LLC v. DOL, 3d Cir., No. 23-02608, opinion issued 7/29/25.